Demand for nickel in energy sector set to spur Bin...

Demand for nickel in energy sector set to spur Bindura Nickel growth

Audrey Galawu

Bindura Nickel said anticipated acceleration in Chinese economic growth due to the implementation of additional stimuli, accommodative USA Monetary Policies, and demand for nickel in the energy storage sector are likely to have a positive impact on nickel prices in the medium to long-term.

Bindura Nickel expects average LME Nickel prices to trend lower in the third quarter of 2024 Financial Year, settling at an average of US$18 593 per tonne, due to oversupply in the market.

Nickel prices to trend lower in the third quarter of FY2024, settling at an average of US$18 593 per tonne, due to oversupply in the market.

In its 2023 Financial report, Bindura Nickel reported revenue decrease by 43% from US$32.5 million reported in the same period last year to US$18.5 million on account of low Nickel sales volume and low Nickel prices during the period.

Cost of sales decreased by 22% to US$24.7 million, compared to US$31.5 million for the same period last year. The decrease in cost of sales was mainly due to a lower run-of-mine. Resultantly, the Company recorded a gross loss of US$6.2 million compared to a gross profit of US$1.05 million reported in the same period last year.

Bindura Nickel Chairperson, Muchadei Masunda said Nickel prices were heavily affected by demand-supply realities associated with the production of surplus Nickel Pig Iron by Indonesia and the slow recovery in China’s economy. Nickel prices are expected to remain relatively low in the short to medium term.

“Economic activity in Zimbabwe was constrained during the period, hampered by macroeconomic conditions such as exchange rate instability, coupled with global headwinds emanating from the cumulative effect of tightened monetary policies and plummeting commodity prices. The mining sector continued to experience persistent power shortages, which adversely affected production.

“The continuous soaring of power cost, increased by 40% in October 2022 and by a further 15% in November 2023, will have a negative impact on mining costs,” he said.

On a positive note, the year-on-year inflation rate averaged 18.4% by the end of September 2023, a 91% decrease from the 213% recorded in the comparative period. The operating environment for the remainder of Financial Year 2024 (“FY2024”) is projected to remain difficult due to the protracted effects of the macro-economic challenges experienced during the first half of FY2024, leading to an increase in input costs.

A loss from operating activities of US$8 million was incurred, compared to a loss of US$4.9 million in the first half of last year. The loss is reflective of the low revenue recorded during the period. The total comprehensive loss for the period was US$6.7 million, compared to a total comprehensive loss of US$5.4 million for the same period last year.

No Lost Time Injuries were recorded, an improvement from one LTI which was recorded in the same period last year. The Company achieved 3 923 710 fatality-free shifts by the end of September 2023 since the last fatality recorded in June 2015.